This paper addresses the issue of favoritism at the design stage of a complex procurement auction. A community of citizens wants to procure a project and lacks the knowledge and the ability to translate its preferences into operational technical specifications. This task is delegated to a public officer who may collude with one of the firms at the design stage of the procurement auction in exchange of a bribe. We investigate two simple accountability mechanisms: a random challenge mechanism (RCA) and an alert-based mechanism (ABA), that require justifying one aspect of the technical decision drawn randomly (RCA) or determined by the competitors (ABA). Relying on competitors enables the community to deter favoritism significantly more easily than by relying only on random challenges and the level of penalty needed to fully deter corruption is independent of the complexity of the project and depends on the degree of differentiation within the industry. In an illustrative example, we study the patterns of favoritism when corruption occurs under ABA and compare them with the patterns in the random challenge mechanism.
{"title":"Accountability to Contain Corruption in Procurement Tenders","authors":"B. Caillaud, A. Lambert-Mogiliansky","doi":"10.1093/jleo/ewaa007","DOIUrl":"https://doi.org/10.1093/jleo/ewaa007","url":null,"abstract":"This paper addresses the issue of favoritism at the design stage of a complex procurement auction. A community of citizens wants to procure a project and lacks the knowledge and the ability to translate its preferences into operational technical specifications. This task is delegated to a public officer who may collude with one of the firms at the design stage of the procurement auction in exchange of a bribe. We investigate two simple accountability mechanisms: a random challenge mechanism (RCA) and an alert-based mechanism (ABA), that require justifying one aspect of the technical decision drawn randomly (RCA) or determined by the competitors (ABA). Relying on competitors enables the community to deter favoritism significantly more easily than by relying only on random challenges and the level of penalty needed to fully deter corruption is independent of the complexity of the project and depends on the degree of differentiation within the industry. In an illustrative example, we study the patterns of favoritism when corruption occurs under ABA and compare them with the patterns in the random challenge mechanism.","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"1 1","pages":""},"PeriodicalIF":1.1,"publicationDate":"2020-05-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82063203","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A model of employer learning (both symmetric and asymmetric) about worker ability from job histories is constructed, and testable implications are derived to detect asymmetric learning empirically. The model predicts that early-career bad job matches are particularly damaging when learning is asymmetric. Analysis of NLSY79 data reveals that job hopping is associated with lower wages for college graduates, controlling for measured ability, labor market experience, and current job tenure. Suggestive of asymmetric learning, the effect is strongest for job tenures less than one year and for early-career workers, and mitigated when job hopping severs matches that were formed during economic downturns.
{"title":"Job Hopping and Adverse Selection in the Labor Market","authors":"Xiaodong Fan, Jed DeVaro","doi":"10.1093/jleo/ewz021","DOIUrl":"https://doi.org/10.1093/jleo/ewz021","url":null,"abstract":"A model of employer learning (both symmetric and asymmetric) about worker ability from job histories is constructed, and testable implications are derived to detect asymmetric learning empirically. The model predicts that early-career bad job matches are particularly damaging when learning is asymmetric. Analysis of NLSY79 data reveals that job hopping is associated with lower wages for college graduates, controlling for measured ability, labor market experience, and current job tenure. Suggestive of asymmetric learning, the effect is strongest for job tenures less than one year and for early-career workers, and mitigated when job hopping severs matches that were formed during economic downturns.","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"38 1","pages":"84-138"},"PeriodicalIF":1.1,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84954960","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Collective Action, White Flight, and the Origins of Racial Zoning Laws","authors":"Werner Troesken, Randall P. Walsh","doi":"10.1093/JLEO/EWZ006","DOIUrl":"https://doi.org/10.1093/JLEO/EWZ006","url":null,"abstract":"","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"104 1","pages":"289-318"},"PeriodicalIF":1.1,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75544266","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We highlight a novel trade-off with the use of breakup fees in employment contracts. Under asymmetric learning about workers’ productivity, the market takes job assignments (or “promotions”) as a signal of quality and bids up the wages of a promoted worker, leading to inefficiently few promotions (Waldman, M. 1984. “Job Assignments, Signalling, and Efficiency” 15 RAND Journal of Economics 255–67). Breakup fees can mitigate such inefficiencies by shielding the firm from labor-market competition, but they reduce turnover efficiency when there are firm-specific matching gains. We show that it is optimal to use breakup fees if and only if the difference between the worker’s expected productivity in the pre- and post-promotion jobs is small. Also, the relationship between the optimality of breakup fees and the importance of firm-specific human capital is more nuanced than what the extant literature may suggest.
我们强调了在雇佣合同中使用分手费的一种新的权衡。在对工人生产率的不对称学习下，市场将工作分配(或“晋升”)作为质量的信号，并抬高晋升工人的工资，导致低效的晋升(Waldman, M. 1984)。《工作分配、信号和效率》，《兰德经济学杂志》，第15期，第255-67页。分手费可以通过保护公司免受劳动力市场竞争的影响来缓解这种低效率，但当公司有特定的匹配收益时，它们会降低周转效率。我们表明，当且仅当员工在晋升前和晋升后工作的预期生产率之间的差异很小时，使用分手费是最优的。此外，分手费的最优性与企业特定人力资本的重要性之间的关系比现有文献所暗示的更为微妙。
{"title":"On the Trade-off between Efficiency in Job Assignment and Turnover: The Role of Breakup Fees","authors":"A. Mukherjee, Luís Vasconcelos","doi":"10.1093/JLEO/EWY003","DOIUrl":"https://doi.org/10.1093/JLEO/EWY003","url":null,"abstract":"We highlight a novel trade-off with the use of breakup fees in employment contracts. Under asymmetric learning about workers’ productivity, the market takes job assignments (or “promotions”) as a signal of quality and bids up the wages of a promoted worker, leading to inefficiently few promotions (Waldman, M. 1984. “Job Assignments, Signalling, and Efficiency” 15 RAND Journal of Economics 255–67). Breakup fees can mitigate such inefficiencies by shielding the firm from labor-market competition, but they reduce turnover efficiency when there are firm-specific matching gains. We show that it is optimal to use breakup fees if and only if the difference between the worker’s expected productivity in the pre- and post-promotion jobs is small. Also, the relationship between the optimality of breakup fees and the importance of firm-specific human capital is more nuanced than what the extant literature may suggest.","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"48 1","pages":"230-271"},"PeriodicalIF":1.1,"publicationDate":"2018-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91323313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Unilateral presidential actions often face implementation problems in the executive branch. I argue these actions are better studied as delegation. I model the conditions under which a president is likely to delegate and provide discretion to subordinates either insulated or uninsulated from their control. I find legislators benefit from agency discretion when presidents pursue policymaking in the executive branch. The threat of legislative sanction induces agents to deviate from presidential priorities, and inter-branch disagreement increases bureaucratic non-compliance in insulated agencies. Nonetheless, in equilibrium, the president is more likely to delegate to insulated agents. Ultimately, the model demonstrates how the politics of direct action are influenced by the need for bureaucratic cooperation. Case studies on US presidential directives mandating public funding of gun violence research and security reforms at government facilities illustrate key features of the model.
{"title":"Delegation or Unilateral Action","authors":"Kenneth Lowande","doi":"10.1093/JLEO/EWY001","DOIUrl":"https://doi.org/10.1093/JLEO/EWY001","url":null,"abstract":"Unilateral presidential actions often face implementation problems in the executive branch. I argue these actions are better studied as delegation. I model the conditions under which a president is likely to delegate and provide discretion to subordinates either insulated or uninsulated from their control. I find legislators benefit from agency discretion when presidents pursue policymaking in the executive branch. The threat of legislative sanction induces agents to deviate from presidential priorities, and inter-branch disagreement increases bureaucratic non-compliance in insulated agencies. Nonetheless, in equilibrium, the president is more likely to delegate to insulated agents. Ultimately, the model demonstrates how the politics of direct action are influenced by the need for bureaucratic cooperation. Case studies on US presidential directives mandating public funding of gun violence research and security reforms at government facilities illustrate key features of the model.","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"12 1","pages":"54-78"},"PeriodicalIF":1.1,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83722798","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The nondelegation doctrine has been fought over for decades, yet scholars have not examined a foundational question: can judicial doctrine materially shape legislative drafting practices? Even if a strong nondelegation doctrine provides legislators an incentive to draft narrow statutes, they would have many reasons to persist in broad delegations, and it is not clear whether the doctrinal incentives predominate. Here, I examine the relationship between the nondelegation doctrine and lawmaking behavior at the state level using several novel datasets, including a collection of state session laws between 1990 and 2010, and a comprehensive survey of state nondelegation judicial decisions over the last 20 years. Contrary to the common assumption, I find that the robustness of the nondelegation doctrine appears essentially unrelated to legislative drafting practices. This pattern suggests the limited extent to which judicial doctrine can control legislative practices; it also suggests a revived nondelegation doctrine at the federal level is unlikely to effectuate the hopes of proponents or the fears of opponents.
{"title":"The Limits of Judicial Control and the Nondelegation Doctrine","authors":"Edward H. Stiglitz","doi":"10.2139/SSRN.2611313","DOIUrl":"https://doi.org/10.2139/SSRN.2611313","url":null,"abstract":"The nondelegation doctrine has been fought over for decades, yet scholars have not examined a foundational question: can judicial doctrine materially shape legislative drafting practices? Even if a strong nondelegation doctrine provides legislators an incentive to draft narrow statutes, they would have many reasons to persist in broad delegations, and it is not clear whether the doctrinal incentives predominate. Here, I examine the relationship between the nondelegation doctrine and lawmaking behavior at the state level using several novel datasets, including a collection of state session laws between 1990 and 2010, and a comprehensive survey of state nondelegation judicial decisions over the last 20 years. Contrary to the common assumption, I find that the robustness of the nondelegation doctrine appears essentially unrelated to legislative drafting practices. This pattern suggests the limited extent to which judicial doctrine can control legislative practices; it also suggests a revived nondelegation doctrine at the federal level is unlikely to effectuate the hopes of proponents or the fears of opponents.","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"100 1","pages":"27-53"},"PeriodicalIF":1.1,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79330192","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Daniel B. Magleby, Nathan W. Monroe, Gregory Robinson
Much recent work on legislative policy making has focused on the implications of agenda power. Yet, a critical step of the legislative process—floor amendments—has been almost entirely ignored in the most prominent theories of legislative decision making. In this paper, we fill this gap by developing a theoretical treatment of agenda setting at the amendment stage. Specifically, our theoretical approach defines the relationship between agenda setting at the amendment stage and outcomes at final passage. We test several implications using data from the US House of Representatives, and show that amendments do mitigate some of the majority party’s agenda setting advantage by moderating initial proposals away from the majority party position. However, amendments do not systematically undermine the majority party’s negative agenda control, as we find that amendment rolls do not increase the incidence of final passage rolls for the majority party.
{"title":"Amendment Politics and Agenda Setting: A Theory with Evidence from the US House of Representatives1","authors":"Daniel B. Magleby, Nathan W. Monroe, Gregory Robinson","doi":"10.1093/JLEO/EWX016","DOIUrl":"https://doi.org/10.1093/JLEO/EWX016","url":null,"abstract":"Much recent work on legislative policy making has focused on the implications of agenda power. Yet, a critical step of the legislative process—floor amendments—has been almost entirely ignored in the most prominent theories of legislative decision making. In this paper, we fill this gap by developing a theoretical treatment of agenda setting at the amendment stage. Specifically, our theoretical approach defines the relationship between agenda setting at the amendment stage and outcomes at final passage. We test several implications using data from the US House of Representatives, and show that amendments do mitigate some of the majority party’s agenda setting advantage by moderating initial proposals away from the majority party position. However, amendments do not systematically undermine the majority party’s negative agenda control, as we find that amendment rolls do not increase the incidence of final passage rolls for the majority party.","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"9 1","pages":"108-131"},"PeriodicalIF":1.1,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81597064","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Social Impact Bonds: New Product or New Package?","authors":"M. Pauly, A. Swanson","doi":"10.1093/JLEO/EWX012","DOIUrl":"https://doi.org/10.1093/JLEO/EWX012","url":null,"abstract":"","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"8 1","pages":"718-760"},"PeriodicalIF":1.1,"publicationDate":"2017-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84242241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We estimate the impacts of being connected to politicians on occupational choice. We use an administrative dataset collected in 2008-2010 on 20 million individuals and rely on naming conventions to assess family links to candidates in elections held in 2007 and 2010. We first estimate the value of political connections by applying a regression discontinuity design to close elections in 2007. Those estimates likely combine the benefits from connections to current office-holders and the cost associated with being related to a losing candidate. We use individuals connected to successful candidates in the 2010 elections as control group and find that relatives of current office-holders are more likely to employed in better paying occupations. Relatives of candidates who narrowly lost in 2007 have lower occupations. A third-party randomly split our dataset in two and gave us sample 1. Once the review is completed, we will apply the approved methodology to sample 2.
{"title":"Do Politicians’ Relatives Get Better Jobs? Evidence from Municipal Elections","authors":"Julien Labonne, M. Fafchamps","doi":"10.2139/SSRN.2657010","DOIUrl":"https://doi.org/10.2139/SSRN.2657010","url":null,"abstract":"We estimate the impacts of being connected to politicians on occupational choice. We use an administrative dataset collected in 2008-2010 on 20 million individuals and rely on naming conventions to assess family links to candidates in elections held in 2007 and 2010. We first estimate the value of political connections by applying a regression discontinuity design to close elections in 2007. Those estimates likely combine the benefits from connections to current office-holders and the cost associated with being related to a losing candidate. We use individuals connected to successful candidates in the 2010 elections as control group and find that relatives of current office-holders are more likely to employed in better paying occupations. Relatives of candidates who narrowly lost in 2007 have lower occupations. A third-party randomly split our dataset in two and gave us sample 1. Once the review is completed, we will apply the approved methodology to sample 2.","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"8 1","pages":"268-300"},"PeriodicalIF":1.1,"publicationDate":"2017-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77156127","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A firm's incentive to invest in product safety is affected by both the market environment and the liability when its product causes consumer harm. A long-standing question in law and economics is whether competition can (partially) substitute for product liability in motivating firms to improve product safety. We investigate this issue in a spatial model of oligopoly with product differentiation, where reputation provides a market incentive for product safety and higher product liability may distort consumers' incentive for proper product care. We find that partial liability, together with reputation concerns, can motivate firms to make socially desirable safety investment. Increased competition due to less product differentiation lowers equilibrium market price, which diminishes a firm's gain from maintaining reputation and raises the socially desirable product liability. On the other hand, an increase in the number of competitors reduces both the benefit from maintaining reputation and the potential cost savings from cutting back safety investment; consequently, the optimal liability may vary non-monotonically with the number of competitors in the market. In general, therefore, the relationship between competition and product liability is subtle, depending on how competition is measured.
{"title":"Competition, product safety, and product liability","authors":"Yongmin Chen, X. Hua","doi":"10.1093/JLEO/EWX004","DOIUrl":"https://doi.org/10.1093/JLEO/EWX004","url":null,"abstract":"A firm's incentive to invest in product safety is affected by both the market environment and the liability when its product causes consumer harm. A long-standing question in law and economics is whether competition can (partially) substitute for product liability in motivating firms to improve product safety. We investigate this issue in a spatial model of oligopoly with product differentiation, where reputation provides a market incentive for product safety and higher product liability may distort consumers' incentive for proper product care. We find that partial liability, together with reputation concerns, can motivate firms to make socially desirable safety investment. Increased competition due to less product differentiation lowers equilibrium market price, which diminishes a firm's gain from maintaining reputation and raises the socially desirable product liability. On the other hand, an increase in the number of competitors reduces both the benefit from maintaining reputation and the potential cost savings from cutting back safety investment; consequently, the optimal liability may vary non-monotonically with the number of competitors in the market. In general, therefore, the relationship between competition and product liability is subtle, depending on how competition is measured.","PeriodicalId":47987,"journal":{"name":"Journal of Law Economics & Organization","volume":"10 1","pages":"237-267"},"PeriodicalIF":1.1,"publicationDate":"2017-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91376996","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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